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Air-India pilots to bid for strategic stake

Pilots working for Air-India said on Thursday that they are organising their own consortium to bid for a 40 per cent strategic stake in the state-run international carrier.

"We are in the process of shortlisting an Indian partner, which we will choose within 10 days," said K R Singh, secretary of the Indian Pilots' Guild, comprising 425 Air-India pilots. The guild promised no staff retrenchments if its bid was successful. The government is to sell a 60 per cent stake in Air-India, which has piled up losses of Rs 10 billion ($230 million).

Forty per cent will be sold to a "strategic investor" -- which would include a maximum 26 per cent stake for a foreign airline -- and 20 per cent to employees and financial institutions.

New Delhi has not estimated Air-India's net value but an airline source predicted that the 40 per cent stake would go for around Rs 60 billion.

Singh said the guild would have little trouble raising finance for the bid, which has to be submitted by November 10.

"There are plenty of investment bankers looking at the returns this venture could reap and so finances are not the big problem. What we are looking for are the managerial skills in a partner," Singh said.

He said the Air-India pilots decided to bid for a stake after a similar experiment succeeded with United Airlines in the United States.

"United gave us the inspiration. If the American pilots can run an airline then we can also do it," he said.

The guild is expected to have to compete with three consortia -- Singapore Airlines and the Tata Group, British Airways and India's domestic private Jet Airways, as well as Air France and Delta Airlines.

The Tata group pioneered aviation in India and was the original owner of Air-India before it was nationalised in the 1950s.

Singh said the guild was concerned about the airline's liabilities as well as the bilateral landing rights agreements Air-India has signed with overseas carriers.

Between last November and August, the agreements to carry passengers and freight to and from 16 countries generated Rs 8 billion.

But Air-India's share of the profits was only Rs 1.6 billion because of the limitations of its fleet. The airline has 26 aircraft -- many of them 20 years old.

"The silver lining is that the bilateral agreements will be with us and a complete restructuring, fleet expansion and upgrading of products will be done to compete in the world's international market," Singh added.

Air-India has a workforce of about 18,000, and its employee to aircraft ratio of about 700 to one is among the highest of any international airline.

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